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Uncertainty and spending habits make it difficult for affluent investors to set aside money

Affluent Americans have figured out how to make money, but a big chunk of them aren’t sure how to make it last through retirement. A survey released Wednesday by Natixis Global Asset Management found 16% of investors with more than $1 million said they don’t have enough money to put some away for the future. Almost one-third of investors with between $200,000 and $1 million say they don’t have enough money to set aside savings.

Natixis surveyed more than 460 investors and found that 27% of Americans with at least $200,000 in investable assets aren’t sure how much they should save. Additionally, 18% of wealthy investors over 50 and 22% of investors with more than $1 million don’t know how much they need for retirement.

“Advisors are finding themselves in the business of cash flow management,” Tracey Flaherty, senior vice president of retirement strategies for Natixis Global Asset Management, told AdvisorOne on Friday. “They’re helping their clients reduce spending and do a better job of cash management. Especially in the case of retirees, many advisors will put their clients on a budget.”

Part of investors’ unwillingness to save certainly comes down to a preference for spending, especially among investors with less than $1 million. Overall, 18% of investors said they’d rather spend today than save for tomorrow, but 22% of investors with between $200,000 and $500,000 agreed. Among investors with more than $1 million, 13% said they’d rather spend than save.

Flaherty also said that some people may be under the impression that affluent investors ”know what they’re doing” when it comes to investing, “but that may not be the case.”

Communication is key, she said. “Advisors should have regular meetings on their plan with all their clients,” she said.

Tax time, she said, is the perfect opportunity to sit down with clients and make adjustments to their plan. “There are easy things they could be doing,” Flaherty said, “like maxing out their 401(k) contribution, catch-up contributions, contributing to their IRAs.”

Almost half of investors say providing for themselves and their families is their top motivation in saving. Asset growth and capital preservation ranked far lower at 18% and 9%, respectively.

Another factor hindering affluent Americans’ retirement preparedness is fear of risk. Almost half of investors surveyed said they limited their savings and investing because of volatility in the market. In fact, almost three-quarters of respondents categorized their portfolios as “not risky” or “neutral.”

Wealthier investors were less likely to rate their portfolios as risky. One-third of investors with less than $1 million said they had risky portfolios compared with 17% of investors with more than $1 million. More than one-third of men said they had a risky portfolio, but just 19% of women did.

“Too many Americans don’t know what they need to do to meet their goals, and that is limiting their ability to prepare for the future," John Hailer, president and chief executive officer for Natixis Global Asset Management, said in a statement. "They aren’t aware of the solutions available to them or simply don’t have enough money available to put toward savings. The combination could be harmful for Americans’ long-term financial health.”

Flaherty suggested advisors look at alternative investments for their clients. “Alternatives have gotten much more popular in the last four to five years due to the correlation problems we saw with other products,” she said.

Alternatives can help investors reduce volatility and meet their long-term income objectives “In retirement, they need to be doing both," she said. "Too few advisors and investors are considering alternatives as part of their asset allocations.”